My experience with Arc over the past couple of years is that drivers have improved quite a bit, but it's mostly for stuff that doesn't get actively benchmarked by people like me. I haven't tested a DX9 or DX10 game in close to a decade I would say. But having support for older games is important, and the good news is that with the DX9 wrapper Intel created over a year ago, most of the compatibility problems were addressed AFAIK.
I am equally sure there are still plenty of edge cases — "But game [x] doesn't run properly on Arc!" I think one of the games someone mentioned to me was an older Mass Effect, which worked at one point and then stopped working with newer drivers? But broadly speaking, if you're not routinely dabbling in more esoteric games (meaning, smaller indie games, or stuff from years ago that you just felt like playing), Arc GPUs are fine.
The transistor density and power efficiency are still odd, though. They're far lower than competing GPUs. I don't know if Intel is using automated layout algorithms that just aren't tuned as well, or if there's something else at play. But when you look at "10% faster than RTX 4060" and tack on "while using 50% more power" it shows there's still a lot of room for improvement. We'll see how it goes once I get drivers and run a bunch of benchmarks.